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Credit cards are convenient and secure methods of payment, but they are by no means simple financial instruments. Those who are looking for a new card can be confounded by confusing terms, conditions and offers of rewards.

With cardholder agreements and guides to benefits that consume dozens of pages, how much of this information is really relevant to the average credit card user? Here are the five key factors that you should focus on when you consider applying for a new credit card.

1. Fees 

Does the card have an annual fee? If it does, will the rewards offered by this card outweigh both the annual fee and any rewards you would have earned by using the next-best card with no annual fee? In many cases, cards have an annual fee that is waived the first year, so keep that in mind as well.

If you are going to be traveling outside of the U.S., you will want to hold at least one card without foreign transaction fees. Although most credit cards charge a 3% fee on all charges processed outside of the U.S., there is a growing number of cards that no longer impose this charge.

On the other hand, there are several credit cards that offer to waive common fees. For example, the Discover it card will waive cardholder’s first late fee each year, and the PenFed Promise card, offered by the Pentagon Federal Credit Union, boasts of having no fees at all.

To find out what fees your card charges, be sure to click on the terms and conditions. There, all the fees will be laid out in a standard format called the Schumer Box.

2. Benefits

Beyond merely acting as a method of payment, credit cards can include a number of extremely valuable benefits. Most, but not all cards will include some form of rental car collision damage waiver that will take the place of the expensive insurance policies sold by the day.

Other popular features include purchase protection, extended warranty coverage and travel insurance policies. Finally, many cards co-branded with airlines and hotel chains will offer either elite status or many of the benefits normally bestowed on their most frequent customers.

3. Interest Rates or Rewards?

There are many credit cards that offer rewards for spending in the form of points, miles, or cash back. These rewards should only be pursued by those who always pay their statement balances in full and on time, otherwise, cardholders should look for a card with the lowest interest rates. Again, this will all be spelled out in the Schumer Box in the cards terms and conditions.

Those who seek rewards should find the card that offers the most value per dollar spent. One cent per dollar spent is considered nominal, whereas anything above 2% is excellent. Most rewards credit cardholders are content to earn something in between.

If you tend to carry a balance, you should instead be focused on finding a card with the lowest possible interest rates, which won’t be a rewards card. Those with excellent credit can find a card with interest rates of 10% APR or below, while others with fair or good credit will see rates of 20% or higher. Thankfully, the Credit CARD Act of 2009 requires that banks set minimum payments high enough that some principal is paid down. Previously, minimum payments could be so low that cardholders could owe more even after making their minimum payment, a process known as negative amortization.

If you’re not sure how your credit stacks up, you can use a variety of free online tools. You can get free copies of your credit reports every year at AnnualCreditReport.com, and Credit.com provides access to two free credit scores, a breakdown of the factors that determine those scores, and tips for what you can do to improve.

4. Sign-Up Bonus

We hear all the time from companies who claim to value our business, but the credit card industry puts its money where its mouth is. Credit card applicants are frequently offered a sign-up bonus in the form of rewards and/or promotional financing. Rewards credit cards can offer new applicants additional points, miles or cash back worth hundreds of dollars, so it pays to apply for the best offers.

In addition, many cards feature interest-free promotional financing on new purchases, balance transfers, or both. Those applying for a new credit card with promotional financing should be sure to compare the length of these limited-time offers, which range from six to 18 months.

5. Customer Service

Many credit card users become infuriated with their cards when they have a bad experience with the card issuer’s customer service. The truth is that some card issuers do customer service better than others, but it is not very easy for credit card applicants to judge this ahead of time.

Nevertheless, some cards do advertise superior service features. For example, Discover is generally seen as offering good customer service, and the Discover it card promises that all calls will be answered by U.S.-based representatives. Furthermore, Chase Sapphire Preferred cardholders are said to receive direct access to customer service specialists, and Chase advertises “When you call us, our phones are answered by people, not prompts.”

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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